Permian production exceed 6 million barrels, analysts say
February 9, 2024
by Mella McEwen
In a testament to the technological and efficiency gains seen in the Permian Basin, the region saw oil production surge despite a decline in drilling activity.
East Daley Analytics estimates Permian Basin production ended 2023 at a record 6.115 million barrels of oil a day. The analytics firm puts that growth at 500,000 barrels a day, up 8.8% in December 2023 from production of 5.62 million barrels a day at the end of 2022. Analysts said growth was stronger in the second half of the year as new natural gas processing infrastructure and natural gas pipeline expansions entered service, allowing producers to bring more wells online.
“The Permian Basin continues to defy all expectations,” Ben Shepperd, president of the Permian Basin Petroleum Association, told the Reporter-Telegram by email. “The hard-working men and women in the industry deserve a word of thanks from every American for producing the products our country, and the world, depend on. Unfortunately, the relentless legislative and regulatory attacks on our industry threaten the very industry which supplies so much.”
East Daley found drilling activity declined throughout 2023, falling 49 rigs or 14% for the year. The Permian Basin rig count, which includes West Texas and southeast New Mexico, ended 2023 at 302 rigs, down from 351 at the end of 2022. Company analysts say that is the lowest rig count since January 2022, when the region was producing 4.977 million barrels a day.
Analysts attribute the falling rig counts in part to a series of mergers, notably ExxonMobil agreeing to acquire Pioneer Natural Resources and Occidental Petroleum agreeing to purchase CrownRock. According to East Daley, private operators posted the largest yearly decline in basin rig counts, down 33% in 2023. Drilling by private operators fell 17% in the Delaware and 36% in the Midland sub-basins.
Despite the lower rig count, analysts said efficiencies in drilling and completion work are driving productivity gains from new wells and more than offsetting lower rig counts in the company’s model. East Daley projects Permian crude production to grow 7% in 2024 while rig counts hold relatively steady, up 2% at the end of the year.